With Pacific Gas & Electric Corp. in bankruptcy amid billions of dollars in wildfire liability claims, some California cities are considering buying off pieces of the utility's assets and running parts of the power system on their own.
But new legislation aimed at bringing financial stability to PG&E and other utilities could make it harder for local governments to do that.
The bill would add protections for workers and involve regulators if any piece of a utility changes ownership.
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Critics see it as a move to stall the purchase of PG&E assets.
"It significantly undermines future efforts to create municipal utilities," said state Sen. Scott Wiener, of San Francisco, the lone Senate Democrat to oppose the bill.
He said the state's model of relying on investor-owned utilities such as PG&E is broken, and cities need flexibility to pursue other options. The other major investor-owned utilities in the state are Southern California Edison and San Diego Gas & Electric.
San Francisco, where PG&E is based, is examining options for taking over pieces of the utility.
A May report by the San Francisco Public Utilities Commission said public ownership of the electric grid could help the city become carbon neutral by 2030 and stabilize electricity rates.
The city already has its own power system but relies on PG&E to deliver electricity to many customers.
The bill has already won approval in the state Senate and has a Wednesday hearing in the Assembly. Gov. Gavin Newsom wants it passed before lawmakers go on a monthlong break beginning Friday.
One provision would require approval by the California Public Utilities Commission for any purchase of utility assets by a local government.
Under current law, those governments could use eminent domain to take ownership of assets at fair market value. The proposed change would allow the commission to consider other costs in deciding the purchase.
San Jose Mayor Sam Liccardo, San Francisco Mayor London Breed and Oakland Mayor Libby Schaaf sent lawmakers and Newsom a letter this week arguing that expanding commission oversight would infringe on the authority of local governments to provide electric service in the future.
Cabinet Secretary Ana Matosantos told an Assembly committee Wednesday that the administration is in talks with cities that have raised concerns.
Labor unions argue the provisions would benefit workers by requiring new owners to protect most jobs for three years.
"I think it's really wise we take a measured approach here and we think about the stability of the utility," said John Mader, president of the Engineers and Scientists of California Local 20, which includes more than 3,700 PG&E employees.
If the utility is splintered, it could lead to a drain of skilled workers, making it even more difficult to ensure California's electrical system is operating safely, he said.
Assemblyman Bill Quirk, a Democrat from Hayward, argued the oversight of the PUC would keep a check on rates for customers while also protecting workers.
The provisions highlight the political wrangling around the bill that has far-reaching implications as California grapples with the impact of catastrophic wildfires caused by utility infrastructure.
A draft of the bill was published weeks ago, with substantial changes filed Friday after the holiday. Senate leaders rushed it through the chamber Monday in about six hours.
"We're being asked to take a leap of faith on a bill we've seen in print for two weeks," Assemblywoman Eloise Gómez Reyes, a Democrat from San Bernardino, said as the legislation got its first Assembly hearing Wednesday.
The bill's authors said it was important to pass the measure as bond rating agencies eye downgrading the credit of the state's biggest utilities and another wildfire season approaches.
The Assembly Utilities and Energy Committee backed the bill by a vote of 10-1. It is expected to get a vote of the full Assembly as early as Thursday.
The legislation would also create a fund to cover the cost of claims from wildfires caused by electric utilities that have followed certain safety steps.
It has won support from an unlikely coalition of groups. But concerns have been raised by the last-minute changes, the speed it's moving through the Legislature and the tug of various special interests.
Wiener said it's important to shore up utilities and protect workers, but the bill seems to do far more.
"What went into the bill went well beyond protecting workers," he said.